More craft beer mergers & acquisitions, but this time with some interesting angles.
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It's about interesting angles. These days, brewery mergers or acquisitions are not uncommon, and we've reported on several of them in the past few months, but this week we share two such stories that have some interesting angles. The first is more about consolidation than acquisition and the other is, well, the second story is a complete reversal of what we're used to hearing. A real "wait, what?" kind of story. Sidle up to the bar and take a sip of this.
The Umbrella of Consolidation
This week F.X. Matt Brewing and Flying Dog Brewery announced that they've merged. Meaning, F.X. Matt acquired Flying Dog Brewery, a 33-year-old brewery located in Fredrick, Maryland. Respectively, the breweries are the 14th and 34th largest craft breweries in the USA according to 2022 production data. The new, larger F.X. Matt (Saranac Brewing) should now move into the top ten. For the unfamiliar, F.X. Matt is a family-owned brewery in Upstate New York that is 135 years old.
For over a decade, F.X. Matt has brewed some of Flying Dog’s beers on a contract basis. Contract brewing has long been part of what F.X. Matt does. For example, Brooklyn Brewing has contract brewed at F.X. Matt for two decades. Over 45 years ago, the company contract-brewed Billy Beer, the namesake beer of President Jimmy Carter’s brother, a reportedly awful beer that enjoyed very short-lived but widespread popularity at the time. So yeah, the contract brewing thing is nothing new.
“Frederick is a great place to live and do business, unfortunately even though we have invested millions of dollars in the brewery, it has too many limitations and puts Flying Dog at too great a competitive disadvantage.”
The brand will live on but the acquisition will see all production of Flying Dog’s beers move to F.X. Matt in Utica, New York. The transition will take place over the summer with operations eventually ceasing at the Flying Dog facility in Maryland by late August. Reportedly, the companies are looking for a location in Fredrick to open a new Flying Dog taproom and innovation brewery.
This story hits on a couple of themes: mergers/acquisitions and contract brewing. It all fits under the umbrella of consolidation. We’ll see more consolidation (mergers, acquisitions, contract brewing agreements) in the coming years as breweries of all sizes try to navigate the changing landscape. Once upon a time in the land of craft beer, contract brewing was rare and not very well received by craft beer enthusiasts. Such arrangements were often kept quiet. Like mergers and acquisitions, contract brewing is getting more common as the industry matures, though this kind of merger (the contractor and the contractee) is not common. That's what makes this an interesting story.
The Car That Caught The Dog
You know the old idiom about the dog that caught the car? Maybe this story is about the car that caught the dog. When the name Anheuser-Busch InBev comes up in conversations about brewery takeovers, it typically involves the beer behemoth acquiring a smaller brewery, often a once-beloved craft brewery. In at least one instance, the tables have now turned.
Late last week, one of A-B InBev’s acquired-craft breweries was taken over by the original founders. Appalachian Mountain Brewery is once again an independent craft brewery and is no longer part of A-B InBev’s "craft beer" portfolio. The brewery’s original founders, Nathan Kelischek and Chris Zieber (above), bought the brewery back.
“We will be shifting our focus immediately on growing our local team, opening our new taproom in Mills River, NC, and continuing our investment in sustainability and philanthropy efforts that make a difference in our North Carolina communities. This all hinges on producing the highest quality products and delivering a unique experience for our customers.”
It wasn’t a direct route. Appalachian Mountain Brewery was founded in 2011. It was small but grew steadily and in 2018 was fully acquired by Craft Brew Alliance (CBA), which at the time was only partially owned by A-B InBev. Appalachian Mountain Brewery became part of A-B InBev when CBA was fully assimilated by A-B InBev in 2020.
What does this mean for other AB-acquired, formerly craft breweries? It's well-documented that some of those breweries are facing their own struggles and we've seen A-B InBev make some adjustments recently. (Think, AB-InBev's decision to shutter Platform Beer Co. in February.) There are about 20 such breweries in AB's portfolio. How many will the company jettison in the coming months and years? Will the company sell them, as it did Appalachian Mountain Brewery, or will it scuttle them like damaged warships? We’ll see.
Around the Web
- The Beer Institute and the National Beer Wholesalers Association (NBWA) released their biennial Beer Serves America report this week, digging into the economic impact of the American brewing industry. The study shows that the U.S. beer industry supports nearly 2.4 million local jobs and contributes more than $409 billion to the economy. This report covers the entire beer industry, not just the craft beer industry. Check out the report here.
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This week's Taster Tray was composed by Kendall Jones.